‘Megaphone’ Spotted on Consumer SPDR ETF’s Chart

By Brendan Conway

It seems that investors can’t quite figure out where a popular exchange-traded fund full of stocks like Amazon.com (AMZN) and Starbucks (SBUX) should go next.

Chartists have spotted what they call a “megaphone” in the Consumer Discretionary Select Sector SPDR Fund (XLY), reports Dow Jones Newswires’ Alexandra Scaggs. The pattern, a series of higher highs and lower lows, “indicates indecision,” Miller Tabak & Co.’s Jonathan Krinsky tells Scaggs. “As you make higher highs, the bulls are in control. And in the lower lows, the bears are in control.”

Technical analysis, tea leaves, etc. But for what it’s worth, Krinsky tells Scaggs that the XLY looks as though it’s at the top of the pattern. That, if history is any guide, could mean there’s a bigger drop ahead.

“If the pattern plays out, Mr. Krinsky says, XLY could get hit,” writes Scaggs. “He thinks shares could fall 18% to $40, a price they haven’t seen since the beginning of 2012.”

The ETF is ahead by 0.2% at $48.59 Wednesday afternoon. The fund’s top weighting, nearly seven percent, lies with Comcast (CMCSA). Amazon is number two while Home Depot (HD) is third.

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